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LGC restructuring questioned

New Hampshire Union Leader

August 22. 2013 9:25PM

CONCORD — The New Hampshire Local Government Center on Thursday completed part of a corporate restructuring that leaves open questions as to whether its entities made the change legally.

Some of the boards under the LGC umbrella unanimously approved resolutions making the changes, which include transferring more than $400 million worth of taxpayer-funded assets, contingent on receiving a written legal opinion that the moves do not violate state laws.

LGC has proposed changing its name back to the New Hampshire Municipal Association — its original name before a 2003 reorganization — and eliminating LLCs that oversee its health insurance, property and liability offerings and municipal advocacy arms. The LLCs were created in 2003 despite LGC being told by the state that it couldn't merge not-for-profit corporations into LLCs, partly because limited liability corporations do not have not-for-profit status in New Hampshire.

LGC instead used ghost corporations created in Delaware to execute the mergers, which failed because they were illegal under New Hampshire law. For the last 10 years, LGC has, technically at least, run three of its operations using for-profit corporations that had the not-for-profit LGC Inc. as its sole owner.

LGC, a taxpayer-funded administrator of public health insurance, property insurance and workers' compensation coverage for tens of thousands of public employees, has an overarching board of directors and boards for its subsidiaries, HealthTrust, Property-Liability Trust and the New Hampshire Municipal Association. The LGC and HealthTrust boards approved the changes Thursday, while the NHMA board approved it last week. A planned meeting of the PLT board was rescheduled to Tuesday.

Executive Director and state Sen. Peter Bragdon, who took the LGC job last week, said LGC's moves go "above and beyond" the requirements of the order, which compelled LGC to form separate boards for its entities but did not specify that the organizations themselves had to split.

Despite Thursday's actions, though, several board members continue to serve on two or three of the various boards. For example, even though the NHMA continues, in press releases, to say it is a "totally separate, independent" operation from the risk pools, its board chairman, Stephen Fournier, and six other board members serve on other boards within the LGC umbrella. In a press release issued Thursday, Fournier said the NHMA is "reviewing the option to contract with HealthTrust for IT and administrative services" and will remain in the LGC building in on Triangle Park in Concord.

David Lang, president of the Professional Fire Fighters of New Hampshire and a frequent LGC critic, got no answers from members of each board as to whether the member towns and cities approved of the restructuring and asset transfers, where the new not-for-profit corporations would obtain the cash to complete what LGC attorney David Frydman called a "purchase agreement" for the entities' assets and whether the boards had ensured that creating a public multiple employee pension plan for employees would be legal.

The boards offered to answer his questions in writing, but not before approving the restructuring plan.

"With all due respect, I find it unconscionable that these simple concepts and these simple questions cannot be answered by a board of directors which took a serious vote," Lang said at the meeting.

According to Lang, much of the meetings were held in nonpublic sessions, which drew a harsh rebuke at one point from HealthTrust board member Cathy Ann Stacey when Frydman, shortly after the board reconvened, asked for a recess to discuss something with board members out of public session.

"I object," Stacey said. "We've been out, how long already, in nonpublic, consulting with counsel and we come back for two minutes and we're going to (go into closed session) again? I'm getting tired of all this nonpublic stuff."


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